NAIOP’s second survey on the impact of the COVID-19 crisis on commercial real estate shows that the outlook evolved during the four weeks since the first survey was conducted. Although conditions are broadly similar to those released in April, the results reveal a moderate rebound in acquisitions and new development, and a modest decline in the outbreak’s effects on current development projects.

Conducted between May 20-22, the latest survey of 461 NAIOP members suggests that the outbreak’s impact on current development projects is slightly less pronounced than it was in late April.

Although a majority still report delays in permitting or entitlements (62.3%) and lower leasing activity for current projects (57.2%), the share of respondents reporting negative effects on current projects was lower for every metric except one, with a small increase in the share of respondents who reported delays in financing. The most notable difference from April is a sharp decline in the share of respondents who reported delays or shortages in construction supplies, from 31.1% to 19.1%.

Survey results also indicate an increase in acquisition and development activity in industrial and multifamily properties. The proportion of respondents who reported witnessing new development in the industrial sector increased from 18.5% in late April to 25.5% in late May. Those reporting acquisitions of existing or under-construction industrial buildings increased from 57.3% to 62.6%. The share reporting development of multifamily properties increased from 16.8% to 21.5%.

Conversely, more respondents expect the outbreak’s effects on their business operations will last longer than a year. While 54.5% of respondents still expect the outbreak to have a significant effect on their business operations for a year or less, the share of respondents expecting this impact to last more than a year has grown, from 36.4% in April to 45.5% in May.

“We are seeing a slight uptick in activity and indications that the immediate negative impact on commercial real estate development may be behind us,” said Thomas J. Bisacquino, NAIOP president and CEO. “The number of respondents who say the outbreak’s effects will linger longer than a year may signal that the economic recovery will be more gradual than initially expected.”

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